SANTHI FOUNDRIES PVT LTD,COIMBATORE vs. ITO,CORPORATE WARD 2, COIMBATORE, COIMBATORE

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ITA 80/CHNY/2025Status: DisposedITAT Chennai17 April 2025AY 2018-194 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the disallowance was made based on the dates recorded in the audit report without actual verification of the payment challans. The assessee's Authorized Representative (AR) submitted that the Addl. CIT(A) also failed to verify these payment details. Finding merit in the AR's submission, the Tribunal held that the issue required factual verification of the actual dates of payment of employees' contribution based on the challans. Therefore, the Tribunal deemed it fit to remit the matter back to the file of the Assessing Officer (AO) for a fresh verification and decision in accordance with the law. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Santhi Foundries Pvt. Ltd., filed an appeal against the order of the Addl. CIT(A) for Assessment Year 2018-19. The appeal challenges the confirmation of a disallowance of Rs. 3,02,740/- made under Section 36(1)(va) of the Income-tax Act, 1961. This disallowance pertained to the employees' contribution to PF and ESI, which was quantified in the audit report as having been paid after the due date. The assessee contended that the auditor had erroneously recorded the payment dates, and that a significant portion, Rs. 2,97,628/-, was actually paid within the due date. The Assessing Officer (AO) and the Addl. CIT(A) had confirmed the disallowance based on the audit report.

What were the issues?

1. Whether the disallowance of Rs. 3,02,740/- on account of employees' contribution to PF & ESI under Section 36(1)(va) of the Act is justified, when the assessee claims the payment was made within the due date, contrary to the audit report? Assessee's Contention: The assessee argued that the disallowance was based solely on an erroneous audit report which incorrectly stated the payment dates. The actual payments of employees' contribution to PF & ESI were made within the statutory due dates as per the provisions of the Act. The assessee also submitted that the Addl. CIT(A) did not verify the actual payment challans. Revenue's Contention: The Revenue, through the learned Departmental Representative, relied on the orders of the lower authorities, implying adherence to the findings of the AO and Addl. CIT(A) based on the audit report.

Which sections of the Income-tax Act were involved?

Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI JAGADISH

For Respondent: Ms. R. Anitha, Addl. CIT
Hearing: 27.03.2025Pronounced: 17.04.2025

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2018-19 arises out of the order of Learned Commissioner of Income Tax, Appeal, Addl/JCIT(A), Panchkula [hereinafter “Addl. CIT(A)”] dated 20.11.2024.

2.

The effective ground of appeal in this appeal of assessee against the confirmation of disallowance of Rs. 3,02,740/- towards employees contribution of PF & ESI u/s. 36(1)(va) of the Income-tax Act, 1961 (hereinafter “the Act”) as quantified in the audit report, without verifying that PF contribution to the extent of Rs. 2,97,628/- was actually paid within the due date, but was wrongly reiterated by the Auditor as delayed.

1.

1. 3. The CPC has made the disallowance of Rs.3,02,740/- u/s. 36(1)(va) of the Act in respect of employees contribution to PF & ESI, based on the audit report, which indicated that the payment was made beyond the due date. The assessee before Ld. Addl. CIT(A) has submitted that the Auditor has erroneously mentioned the date of payment. However, the Ld. Addl. CIT(A) did not accept the assessee’s contention and confirmed the disallowance.

4.

The Ld. Authorized Representative (A.R) of the assessee has submitted that payment of the employees’ contribution, in fact, been made within the due date as per the provisions of the Act, and that the disallowance was made solely on the basis of the audit report, which contained incorrect dates.

5.

On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.

6.

We have heard the rival submissions, and perused the materials available on record. We find that the assessee has submitted the details of payment of employees’ contribution as under:

13 Provident Fund 6052 15/05/2017 6052 13/05/2017 14 Provident Fund 7165 15/06/2017 7165 15/06/2014 15 Provident Fund 58323 15/07/2017 58323 14/07/2017 Provident Fund 16 50203 15/08/2017 50203 08/12/2017 17 Provident Fund 55516 15/09/2017 55516 13/09/2017 18 Provident Fund 57819 15/10/2017 57819 10/12/2017 19 Provident Fund 57487 15/11/2017 57487 15/11/2017 20 Provident Fund 61571 15/12/2017 61571 15/12/2018 21 Provident Fund 63101 15/01/2018 63101 01/12/2018 22 Provident Fund 57826 15/02/2018 57826 15/02/2018 Provident Fund 23 56692 15/03/2018 56692 14/03/2018 24 Provident Fund 64934 15/04/2018 64934 04/12/2018

7.

The Ld. AR has submitted that the disallowance was made on the basis of the dates recorded in the audit report, without actual verification of the payment challans. The Ld. AR has further submitted that the Ld. Addl. CIT(A) also did not verify these payment details. We find merit in the submission of the Ld. AR. Since, it is a matter of factual verification, we deem it fit to remit the matter back to the file of A.O to verify the actual dates of payments of employees’ contribution based on the challans and then decide the issue afresh in accordance with law. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.

8.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced on 17th April, 2025.

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